Wyndham Hotel Group Strategic Overview
Transcript of Wyndham Hotel Group Strategic Overview
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Wyndham Hotel Group
Steven A. RudnitskyPresident & CEO
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Strategic Overview
2002 2003 2004 2005 2006
Strategic Evolution
International expansion
Wyndham Hotel Group has evolved from a U.S. economy-centric franchise business to an integrated, multi-segment, international franchise and management company.
ProjectRestore
Introduced FieldSupport Organization
Revamped QA/Rate and Inventory
Processes
Upscale managementcompany capabilities
Maximize core brand operating performance
Leading Economy segment player
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Global Brand Portfolio
Budget/Economy
Mid-Market
First Class
Luxury
International Segments
Days InnSuper 8
RamadaHoward Johnson
Wyndham Hotels and Resorts
Wyndham Grand Collection
International Brands
Days InnSuper 8
TravelodgeKnights Inn
Economy
Wingate InnRamada
Baymont/AmeriHost InnHoward Johnson
Mid-scale
Wyndham Garden InnUpscale
Wyndham Grand Collection
Wyndham Hotels and Resorts
Upper Upscale
North America BrandsNorth America Segments
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Customer Value Proposition
Brand strengthThree of 10 brands have consumer awareness over 90%Consumer database with over 70 million namesBreadth of brands provides range of franchising optionsWorldwide distribution in all key regions
Brand growth, domestically and internationallySuper 8 and Days Inn: 35% of Economy segment; 100+ RevPAR indexRamada International: opened more than 7,000 rooms since December 2004 acquisition
Ability to drive revenueTripRewards members generate 26% of all consumed nightsReservation contribution at approximately 30% Field staff providing operational and revenue management supportBrand Web sites: projected 50 million visitors, 17% revenue growth year-over-yearthrough web reservations
Leverage scale and efficienciesCentral reservations systemInformation Technology, franchise support infrastructureMarketing and worldwide salesRCI worldwide footprint
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EBITDA
Weighted Average Rooms
Average Daily Rate Occupancy Royalty Rate Royalty
RevenuesX X X =
“RevPAR”
Average Daily Rate Occupancy
Marketing & Reservation
Rate
Marketing & Reservation Revenues
X X X =
=Royalty Revenues +
Marketing & Reservation Revenues
X 0% Other Revenue+
365Days
365Days
X
XWeighted Average Rooms
Franchise Hotel Model
– OperatingExpenses
•TripRewards•Management Fees•Reimbursable Costs•Initial Fees
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Inte
rnat
iona
l dev
elop
men
t
Fran
chis
e sa
les
QA
Wyn
dham
Hot
els
and
Res
orts
2002 2006E
Performance
+8.4% RevPAR CAGR over the past four years• +6.3% CAGR for the industry
RevPAR $25.33 $35.00Royalty/Mktg. andRes. Revenue ($M) $366 $465 - $475EBITDA ($M) $162 $200 - $210
Ong
oing
Ope
ratio
nal
Impr
ovem
ent
Bay
mon
t
Pro
ject
Res
tore
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Performance
Wyndham Hotel Group has exceeded Economy segment RevPAR performance since 2003
-3.3
%
-3.7
%
4.7% 7.
6%
4.1%
-6.7
% -4.0
%
6.1% 8.
6%
4.7% 7.
2%
11.7
%
-6.8
%
-5.5
%
5.9%
9.6%
3.0%
-1.4
%
-0.4
%0.
7%
-0.6
%
-1.6
%
0.6%
2.3%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2000 2001 2002 2003 2004 2005
RevPAR Growth
Economy Mid-scale w/F&B Mid-scale w/o F&B Wyndham Hotel Group
Sources: PricewaterhouseCoopers Hospitality Directions journals, September 2006 (December 2005 for 2000 data)(1) Excludes Ramada International
(1)
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Global Distribution
98.8%0.5%
0.5%
0.2%
1.2%
2002 2006E
Strong progress toward global diversification
Note: As measured by number of rooms
North America EMEA APAC LAM
10.0%3.4%
0.8%5.8%
90.0%
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North America Segment Distribution
30.5%
3.3%
66.2% 65.5%
22.9%
6.8% 4.8%
Expanding into the faster-growing Mid-scale w/o F&B and Upscale segments.
11.6%
2002 2006E
Note: As measured by number of rooms
Economy/Mid-scale w/F&B Mid-scale w/F&B Mid-scale w/o F&B Upscale
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485,3562,817Hilton Hotels Corp.
537,5333,606InterContinental Hotels Group
257,889849Starwood Hotels and Resorts Worldwide
499,1652,741Marriott International
315,8754,195Best Western International
481,1315,897Choice Hotels International
532,2846,344Wyndham Worldwide
134,296731Global Hyatt Corp.
147,129922Carlson Hospitality Worldwide
475,4334,065Accor
Number of RoomsNumber of Hotels
Top Ten Hotel Companies (2005)(Ranked by Total Global Hotels)
Sources: Hotels Magazine, July 2006 for competition
Wyndham Hotel Group is the largest hotel group in the world, measured by number of hotels.
Competitive Comparison
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Industry Overview: United States
Industry RevPAR forecasted to grow +5.9% in 2007RevPAR Growth by Segment in 2007
Economy 5.9%Mid-scale w/ Food & Beverage 5.9%Mid-scale w/o Food & Beverage 7.9%Upscale 7.2%Upper Upscale 6.3%
Industry supply growing 1.6% in 2007
ADR increases driving growth across all segmentsMacroeconomic factors that may affect industry drivers
Corporate profit growth is slowing
RevPAR growth moderating
Sources: PricewaterhouseCoopers September 2006, Merrill Lynch Lodging Supply Watch
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Industry Overview: International
Internationally, the industry is also expected to grow.
Sources: Euromonitor Integrated Market Database – Dec. 2005 for International data;PricewaterhouseCoopers – Sept. 2006 for U.S. data
U.S.
% Forecast Growth Rate2006-08
2005 Gross Revenue$U.S. Billion
+8.2124.0
+5.96.9Mexico
+16.323.8Latin America
-0.480.0Japan
+35.71.3India
+15.015.6China
+4.3110.2Asia Pacific
+14.111.3E. Europe
+1.2121.9W. Europe
+2.3133.2Total Europe
Total Hotel Revenue by Region
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Industry Overview: International
52%48% 45%55%
33%
67%
Total Europe Asia Pacific Latin America
U.S.
Large percentage of small chains/independent hotels offers significant conversion opportunities.
Large ChainSmall Chain/Independent
Sources: Euromonitor Integrated Market Database – Dec. 2005 for International data; STR for U.S. data
39%
61%
BrandedIndependent
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Industry Overview: International
+1.7%$28.4512.0%Economy
+3.7%$47.9133.3%Mid-scale
+3.2%$72.1616.3%Upscale
+3.0%$100.0630.8%Upper Upscale
+4.0%$174.607.5%Luxury
% change 2001-2005RevPAR%
Revenue
Sources: International data: Deloitte & Touche same store analysis 2005U.S. data: PricewaterhouseCoopers, September 2006
Europe
Fastest growing international segments are Mid-market and Budget/Economy.
+14.1%$59.990.4%Budget/Economy
+16.0%$62.9610.3%Mid-Market
-3.7%$81.9968.5%First Class
+6.1%$102.6920.8%Luxury
% change 2000-2005RevPAR%
RevenueAsia
+13.6%$58.754.1%Budget/Economy
+3.7%$72.1024.4%Mid-Market
-1.5%$101.2861.3%First Class
-4.2%$244.1210.2%Luxury
% change 2000-2005RevPAR%
Revenue
U.S.
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Operating Growth
Optimize performanceof North American Economy/Mid-scaleportfolio
Revenue management programNew property management system Increase sales/marketing efficiency Restructure worldwide sales
Refine global brand positioningInvest in sales/marketing to drive reservation contributionImplement essential operational and system efficienciesUtilize RCI global infrastructure
Position Wyndham flagship and Wingate brands as value-added alternatives to competitive brands
Grow International core brands: Wyndham, Ramada, Days Inn, Super 8, Howard Johnson
Pursue tuck-in acquisitions and multi-unit development dealsDrive mixed-use opportunitiesLeverage RCI developer network
Invest in high RevPAR strategic assetsExecute timeshare/mixed-use opportunitiesAlign Wingate
Implement brand standards Integrate loyalty program Invest in sales/marketing Revenue management program
Identify target markets to fill in distributionEnhance customer service culture Capitalize on Baymont brand value propositionPursue portfolio conversions and tuck-in acquisitions
System Growth
Growth Strategies
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Wyndham Master Brand Strategy
AAA 4+ diamondMajor markets Original architectureDistinctive dining/ barStrong local identification
AAA 3, 4 diamondMajor urban & resort destinations Restaurant/bar-casual diningMeeting/event facilitiesFull fitness facilities
AAA 3 diamondMajor/Secondary marketsCasual/select- F&B serviceLimited meeting spaceFitness center
AAA, 2, 3 diamondSecondary markets80+ rooms24/7 F&B martFitness center
Wyndham CollectionWyndham CollectionHistoricHistoric
BoutiqueBoutiqueGrand BayGrand Bay
InternationalInternational
Wyndham Hotels andWyndham Hotels andResortsResorts
Wyndham GardenWyndham Garden WingateWingateby Wyndhamby Wyndham
Wyndham VacationWyndham VacationOwnershipOwnership
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Initiatives
Operating Growth
Invest in high RevPAR strategic assetsExecute time share/mixed-use opportunitiesAlign Wingate
System Growth
Commissioned Michael Graves for new designInvested over $12 Million to fund marketing and product development efforts
Implement brand standardsIntegrate loyalty programInvest in sales/marketingRevenue management program
100+ deals in progressExecuted 15 hotel contracts YTDOpened five hotels YTDRe-branded 16 WVO propertiesCorinthia JV for 11 international properties
Progress To Date
Wyndham Master Brand Strategy
Position Wyndham flagship and Wingate brands asvalue-added alternatives to competitive brands.
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Wyndham Master Brand Strategy
HI
Wingate PipelineWyndham Hotel Wyndham Vacation Ownership
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Wyndham Master Brand Strategy
Wyndham brand has delivered strong performancein key markets
112.1Palm Springs
104.5Miami
101.3Chicago
101.1San Diego
112.4Atlanta
113.9Denver
119.6Houston
RevPARIndex*
* RevPAR Index from STR, WYN hotels vs. market, market = 100
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Wyndham Collection
Historic Hotels: Galveston, Texas
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Wyndham Collection
Historic Hotels: The St. Anthony, San Antonio, Texas
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Wyndham Resorts
Grand Bay Isla Navidad, Mexico
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Wyndham Hotels
Chicago
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Wyndham Hotels
Cleveland Playhouse Square, left, Miami Airport & Executive Meeting Center
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Wyndham Resorts
Sugar Bay, St. Thomas, Virgin Islands
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Wyndham Garden
Overland Park, Kansas
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Jacksonville, Fla.: conversion
Wyndham development activity
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Initiatives
Operating growth
Progress To Date
International Strategy
Pursue tuck-in acquisitions and multi-unit development dealsDrive mixed-use opportunitiesLeverage RCI developer network
Approximately 25% of pipeline is internationalSigned multi-unit development deals in EMEA, APAC and LAMCompleted JVs to develop and manage hotels in Europe and China
Refine global brand positioningInvest in sales/marketing to drive reservation contributionImplement essential operational and system efficienciesUtilize RCI global infrastructure
Developed regional marketingco-opsLaunching multi-lingual Web sitesExpanded in-country marketing structureEstablished and expanded General Sales Agent network
Grow International core brands: Wyndham, Ramada, Days Inn, Super 8, Howard Johnson
System Growth
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Successfully expanded into EMEA, Asia Pacific and Latin America over past three years
8,322
11,344
18,250 - 18,750
13,000 -13,500
7,836
5,244
0
5,000
10,000
15,000
20,000
25,000
2004 2005 2006E
Total Asia PacificChina
3,087
4,000 - 4,500
4,228
0
1,000
2,000
3,000
4,000
5,000
2004 2005 2006E
Total LatinAmerica
32,000 - 32,550
22,84925,083
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2004 2005 2006E
Total EMEA
EMEA Asia Pacific Latin America
Source: Internal
International Performance
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International Development
Development Activity
Ireland
France
India
Italy
Tunisia
Korea
Egypt
Honduras
Belgium
Netherlands
Germany
Czech Republic
Romania
HungarySaudi Arabia
Peru
ChinaArgentina
Australia
U.K.
U.A.E.Mexico
Malta
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International: Corinthia
St. Petersburg, left, and Prague
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International: Corinthia
Budapest
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China joint venture
First project: 140-room Ramada Encore in Wuxi, China
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Days openings
Days Inn Shenzhen
Days Hotel Kilkenny
Days Inn Ferrybridge
Days Hotel Dublin Airport
Days Inn Joiest Beijing
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Super 8 openings
Super 8 Beijing Dong
Super 8 Tianjin Jian GongSuper 8 Shanghai He Jing Super 8 Shenzhen Peng Yue Mei Lin
Super 8 Shanghai Feng Ye Nanzhan
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Ramada openings
Ramada Plaza Cheongju
Ramada Hotel Dresden
Ramada Plaza Guangzhou
Ramada Osaka
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Rooms, Rooms, Rooms
International Business
30
80
130
180
230
2006 2007 2008 2009 2010
International-Medium International-High International-Low
39%
33%
26%
CAGR
Base Business
450
455
460
465
470
475
480
485
490
495
2006 2007 2008 2009 2010
Base-Medium Base-High Base-Low
2%
1.5%
1.0%
CAGR
Wyndham/Wingate Business
30
35
40
45
50
55
60
65
70
75
2006 2007 2008 2009 2010
Wyndham/Wingate-Medium Wyndham/Wingate-Low Wyndham/Wingate-High
11%
8%
6%
CAGR
Note: Rooms in thousands
Combined Business
535.0
585.0
635.0
685.0
735.0
785.0
2006 2007 2008 2009 2010
Combined-High Combined-Medium Combined-Low
7%
6%
4%
CAGR
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Summary
Strategic transformationDiversification of portfolio
InternationalUpscaleManagement Company
Strengthened base business value propositionPerformance
Consistent revenue and earnings growthGoing forward
Optimize performance of North American Economy/Mid-scale portfolioPosition Wyndham flagship and Wingate brands as value-added alternatives to competitive brandsGrow International core brands: Wyndham, Ramada, Days Inn, Super 8, Howard Johnson